Navigant Research Blog

China has now outpaced the United States as the world’s biggest emitter of greenhouse gases (GHG). With a power sector that relies heavily on coal and continued aggressive construction of coal-fired power stations, the country currently accounts for almost 50% of global coal consumption. According to the European Commission’s Joint Research Centre, China’s carbon emissions increased 9% in 2011 to 7.2 tons per person. This figure is only slightly less than the European average of 7.5 tons – though significantly less than the average American at up to 17.3 tons per person.

Realizing the need to address the country’s serious GHG emissions problem – especially with record smog levels in Beijing – the Chinese government is taking a number of steps. It plans to add 49 GW of renewable energy capacity this year and develop an energy plan with the goal of gradually transitioning from fossil fuels to cleaner energy sources, such as hydropower and intermittent resources like wind and solar power. In 2012, about 15 GW of wind and 3 GW of solar energy capacity were added.

New Lows

Most noteworthy is the government’s effort to curb CO2 emissions by initiating a new carbon emissions trading pilot scheme. It is set to launch seven such pilots in various cities and provinces this year that are expected to eliminate at least 700 million tons of annual emissions. The first pilot will be kicked off on June 17 in Shenzhen (southern China) to initially include 635 companies that were responsible for 38% of the city’s total GHG emissions in 2010. This pilot scheme will create the second-largest carbon trading scheme in the world, after the European Union Emissions Trading System (EU ETS). Beijing and Shanghai may soon follow suit, though neither city has scheduled a launch date yet.

It remains to be seen if the Chinese carbon trading program will be as successful as the EU ETS scheme, which has indeed reduced carbon emissions since it was initiated in 2005. But will China, like the EU, eventually face the challenge of a growing surplus of allowances? Recently, the European Parliament proposed to delay the release of 900 million CO2 emission permits in order to stop over-flooding an already saturated market (mainly caused by the economic recession, which has depressed emissions more than anticipated) – a decision that was narrowly defeated soon thereafter in a parliamentary vote because of fear of raising costs for businesses in a sluggish economy. Earlier this year, permits traded at below €3 ($3.90) a ton – compared to €7 ($9.10) a ton last year and €25 ($32.50) a ton in 2008. Shortly after the vote, carbon allowances dropped to €1.70 ($2.20). It is clear that carbon trading can be fraught with problems, and the Chinese market will undoubtedly face its own unique issues in the years ahead. Still, China should be able to draw upon the EU’s experience and its hard-won lessons.

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The discovery of extensive shale oil reserves in North America has led to heightened expectations for using the domestic energy source as a transportation fuel. While environmental challenges exist for extracting and distributing fuel (safe fracking, pipeline expansion, and so on), the biggest hurdles to expanding natural gas as a fuel for passenger vehicles are related to pumping the gas into a tank and keeping it there safely. The U.S. Department of Energy (DOE) has been focusing on these challenges by providing funding to several basic research projects, which were a significant topic of discussion at this spring’s ARPA-E Summit meeting in Washington, D.C.

Natural gas vehicles (NGVs) typically require multiple cylinder tanks in order to store enough fuel to provide a range similar to that of a gasoline car. In larger vans and trucks, this may require three or four tanks. Ford Motor Company has described the current state of storage tanks as “too large, heavy, shape limited and expensive to properly facilitate the widespread adoption of natural gas vehicles.” Through an ARPA-E grant, Ford is working on a 3-year project to develop an adsorption tank system that would increase the energy density of compressed natural gas at lower pressures. The system would enable natural gas to be stored at lower pressure while providing a driving range comparable to that of gasoline car.

Fill ‘Er Up, at Home

The DOE’s Pacific Northwest National Laboratory, located in Richland, Washington, is addressing the cost and efficiency of storage tanks with its ARPA-E grant. The lab is working on developing a ball-shaped tank that would increase the storage efficiency over current rectangular tanks by 90% while using less expensive materials.

Meanwhile, General Electric (GE) is resurrecting the concept of home refueling of natural gas (which was unsuccessfully pitched previously by makers of the Phill) with a low-cost natural gas system that is also being developed thanks to an ARPA-E grant. The system chills the gas to a very low temperature (-50°C) to separate water from gas, which otherwise requires a complicated multistep process. GE hopes to reduce the cost of a home refueling station to less than $500.

As detailed in Navigant Research’s 2012 Light Duty Natural Gas Vehicles report, attempts at popularizing home refueling have failed in both Europe and North America due to the cost of the equipment and limited availability of vehicles. Nevertheless, sales of NGVs in the United States are expected to surpass 30,000 vehicles annually by 2019.

The notion that entire communities and countries could be completely powered by renewable energy still seems like a pipe dream to many. Not to those gathered at the first Pathways to 100% Renewable Energy conference in San Francisco earlier this month. To them, a fully renewable power system is not only achievable, but makes economic sense. And it’s already being accomplished in some places.

Organized by the 100% Renewable Energy Institute, based in Santa Monica, California, the gathering had its fair share of grassroots environmentalists, but it was peppered with esteemed scientists, eco-celebs (such as Frances Moore Lappe), and government officials (San Francisco mayor Edward Lee). Several representatives from the California Independent System Operator (CAISO) were there as well, discussing the variety of smart grid tools – including demand response – necessary to wean large power grids off of fossil fuels that currently burned to balance the variability of wind and solar.

While Denmark is one of the few countries committed to a 100% renewable energy goal for electricity, heat, and transportation, some local governments have already reached the 100% renewable threshold. Perhaps the most inspiring example is Rhein-Hunsruck in southern Germany, a district of roughly 100,000 inhabitants that will produce more than 100% of its own needs from solar, wind, and biomass this year. By 2014, this rural district will be providing 236% of its own energy needs from renewables and hopes to generate significant revenue by exporting excess carbon-free power to the open market. Rhein-Hunsruck has combined aggressive energy efficiency programs, which reduced the district’s overall electricity loads by 25%, with a shift to local and regional power generation from renewables, according to Bertram Fleck, chief administrative officer for the district.

Transition Costs

In the United States, the town of Greensburg, Kansas (pop. 781) is powered completely by wind power. It also boasts the highest per capita LEED platinum green buildings in the United States, highlighting the synergy between energy efficiency and renewable energy to get to the 100% carbon-free energy nirvana.

Despite these victories, there are skeptics. Among them is Peter Lilienthal of HOMER Energy, a leading source for software to design microgrids in the developing world. While he notes that solar photovoltaic (PV) power is now cheaper than diesel fuel, the cost of shifting over entire islands or other remote microgrids to 100% renewable energy is – in Lilienthal’s view – too high and unnecessary. Of course, the beauty of these modular microgrids is that they can green up over time, incorporating a variety of different fuels and technologies.

Still, Michael Jacobson of Stanford University continues to pump out studies mapping out specific portfolios of different wind, water, and sun (WWS) resources that could power entire states such as California or New York, and do not, according to his calculations, bust the bank. A newly released report from the Civil Society Institute also concludes increased reliance upon renewables will not reduce grid reliability, as is so often feared.

Wind, Water, & Sun (& Energy Efficiency) to Meet 100% Demand by 2050

(Source: Stanford University)

At the conference, I gave a presentation on microgrids and virtual power plants, two aggregation and optimization platforms that not only enable high penetrations of renewables, but will also be necessary for countries such as Germany and Denmark to meet their aggressive carbon reduction goals. Without such power grid innovations, shifting to a carbon-free energy future would be impossible.

A good first step in this green energy transformation would be to scale back what the Earth Policy Institute has estimated is $620 billion in government subsidies now flowing toward fossil fuel development. Eliminate those subsidies, level the playing field in energy markets, and the world suddenly looks like a different place.

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The nuclear power industry’s drive to deploy small, modular reactors (SMRs) took a significant step forward this month. Nuclear technology vendor Babcock & Wilcox (B&W) formalized its funding agreement with the U.S. Department of Energy (DOE) for the mPower reactor project. With $79 million of federal funds for this year (and a total of $150 million over the 5-year program), B&W plans to build a prototype SMR at the Clinch River site in Tennessee, owned by the Tennessee Valley Authority (TVA).

SMRs have gleamed in the eyes of nuclear power providers for a decade now, as the industry seeks a new model for economical, carbon-free power generation for the 21st century. The Fukushima nuclear accident in March 2011 seemed to squelch the so-called “nuclear renaissance,” but many countries – including the United States, South Korea, Russia, China, and even Japan – are moving ahead with plans for small reactors that can be factory-crafted (thus “modular”) and assembled onsite. Economies of scale have dominated the nuclear power industry for most of its life, with reactors expanding to 1,000 MW or even 1,500 MW.

Now, many believe that the future of nuclear lies in SMRs of under 300 MW that can be arrayed in multiple configurations, giving power generators more flexibility and, in theory, lower capital costs.

There are more than a dozen designs currently under development for SMRs. Most of them are simply miniaturized versions of existing, light-water reactors; the mPower is a 180 MW “advanced integral pressurized water reactor” that could be deployed not only for supplying power to the grid but in more specialized applications, such as powering remote oilfield operations or desalinating water.

Arctic Nukes

“SMRs offer TVA an important new option for achieving clean, base-load electricity generation and we are ready to begin the work to understand the value of that option,” said TVA senior vice president of policy and oversight, Joe Hoagland, in a statement.

Increased safety is also a feature of SMRs, at least potentially. NuScale Power, a startup principally backed by Fluor Corporation, said at an SMR conference earlier this month that it has developed an inherently safe system that, in case of a full power shutdown such as happened after the Japanese earthquake and tsunami, will self-cool the reactor without the need for external power or water. Essentially, the NuScale design uses a simplified set of water valves that flip open automatically in case of a power disruption.

“Because of the simplicity of the NuScale design, only a handful of safety valves need to be opened in the event of an accident to ensure actuation of the [emergency cooling system],” said Jose Reyes, the co-founder and CTO of NuScale, speaking at the Nuclear Energy Insider SMR Conference in Columbia, South Carolina. “These safety valves have been mechanically pre-set to align to their safe condition without the use of batteries following a loss of all station power.”

The earliest applications for SMRs are likely to be distributed generation in remote places, including military forward operating bases. A Russian consortium is constructing a barge-mounted SMR, based on the nuclear engines that power icebreaker ships, that can be deployed in some of the least hospitable places on Earth. The idea of nuclear reactors powering oil and gas production in the Arctic is hardly a reassuring thought for environmentalists and diplomats, but it’s likely to become a reality in less than a decade.